S P R I N G How Alabama City Finances Compare

Transcription

1 S P R I N G How Alabama City Finances Compare 1

2 How Alabama City Finances Compare Spring 2017 Published by the Public Affairs Research Council of Alabama Ryan Hankins, Executive Director 2

3 PARCA S MISSION The Public Affairs Research Council of Alabama provides independent, objective research, evaluation, and analysis to improve public policy in Alabama. PARCA S HISTORY PARCA was founded in 1998 by former Alabama Governor Albert Brewer and a group of civic leaders, including Tom Corts, Emil Hess, Henry McPherson, Jim North, Fred Renneker, III, William E. Smith, Jr., Jim H. White, III, and John Woods. In the almost 30 years since its founding, PARCA has become Alabama s trusted source for independent research and data analysis, respected by the leaders in the public, private, and non-profit sectors and by those across the political spectrum. PARCA S WORK Data Analysis: Data should be a flashlight, not a hammer. PARCA provides complex data analysis to illuminate opportunities and improve outcomes. Research and Recommendations: Numbers may tell what, but they do not tell why. PARCA seeks to understand what is working, what is not working, and what changes might be feasible. Performance Evaluation: Trying hard is not enough. PARCA works with nonprofits, schools, and government agencies to define goals, measure accomplishments, and identify areas for improvement. Implementation Services: Policies and programs are only as good as their implementation. PARCA works with administrators to design and implement evidence-based solutions. PARCA S FUNDING PARCA is a 501(c)(3) nonprofit corporation. Contract research projects and data analysis generate approximately 40% of annual revenue. The remaining 60% of annual revenue is provided through tax-deductible contributions from individuals, foundations, and corporations. These generous donors ensure that PARCA can continue to provide objective, nonpartisan research for the public good. To support the public research of PARCA, send contributions to P.O. Box , Birmingham, Alabama 35229, or give online at 3

4 2017 Board of Directors PHILIP DOTTS PRESIDENT* Managing Director Public Financial Management, Inc. PRESTON BOLT VICE-PRESIDENT* Managing Partner Hand Arendall JESSE VOGTLE IMMEDIATE PAST PRESIDENT* Partner Balch & Bingham Fred Blackwell President Fred Blackwell Roofing Fred O. Braswell, III President & CEO Alabama Rural Electric Association William J. Canary President & CEO Business Council of Alabama Bob Davis Associate Publisher/Editor The Anniston Star David Donaldson* Vice President, Governmental & Community Relations Vulcan Materials Company Bruce P. Ely Partner Bradley Arant Boult Cummings Tyrone Fenderson, Jr.* Senior Vice President BBVA Compass Bank Ann D. Florie Executive Director Leadership Birmingham Kevin R. Garrison+ Attorney Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. Robert A. Gates Executive Vice President Wells Fargo Bank Betsy Bugg Holloway. Ph.D.* Vice President, Marketing and Communication Samford University Ashley Hugunine+ Attorney Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. Donny Jones COO Chamber of Commerce of West Alabama Barbara W. Larson Executive Director Leadership Alabama Deborah J. Long* Executive Vice President, Chief Legal Officer and Secretary Protective Life Corporation Gordon Martin Senior Vice President, Corporate and Administrative Services Alabama Power Company Larkin Martin* Managing Agent Martin Farms Fred McCallum, Jr. President AT&T Alabama 4 Scott McLain Principal and Managing Broker Coldwell Banker Commercial McLain Real Estate David Muhlendorf President & CEO LDM Company, Retired Jerry W. Powell General Counsel Cadence Bank, N.A. J.T. Price* CEO McKinney Capital Dudley Reynolds CEO Alagasco, Retired Clint Shelton Publisher The Decatur Daily J. Robin Stone Vice President, Governmental Affairs Blue Cross/Blue Shield of Alabama John M. Turner, Jr. Senior Executive Vice President & Head of Corporate Banking Group Regions Financial Corporation Lynne Berry Vallely Realtor Berry Millsaps Properties Neal Wade Director, Economic Development Academy University of Alabama Andrew Westmoreland, Ed.D President Samford University James H. White, III* Chairman Porter, White & Company *Executive Committee

5 +Ex Officio T A B L E O F C O N T E N T S 6 List of Figures 7 Introduction 8 Revenue Comparisons 15 Expenditure Comparisons 20 Long-Term Debt Comparisons 21 Year-End Balance Comparisons 22 Appendix A: The Data 24 Appendix B: About the Data 25 Index 5

6 L I S T O F F I G U R E S CHARTS Chart 1. Percent of Revenue by Source... 9 Chart 2. Revenue Mix Chart 3: Spending by Category Chart 4. Spending Mix in Municipal Operations Chart 5. Per Capita School Support, Capital Spending, Debt Chart 6. Unreserved Fund Balances as Percent of Expenditures TABLES Table 1: Rank in Per Capita Table 2: General Sales Tax Revenue Table 3: Property Tax Revenue Table 4: Occupational Tax Revenue Table 5: Intergovernmental Revenue Table 6: General Business Licenses Table 7: Per Capita Expenditure Rankings Table 8: Public Safety Spending Table 9: Public Works Spending...20 Table 10: Social/Cultural Spending...20 Table 11: General Government Spending Table 12: Debt Service Table 13: Per Capita Finances of Alabama s Largest Cities

7 I N T R O D U C T I O N Since 1989, the Public Affairs Research Council of Alabama (PARCA) has periodically compiled financial comparisons for Alabama s largest cities. This report, the ninth in that series, provides basic information on municipal revenues, expenditures, and general fund balances. The comparisons are in per capita amounts (dollars divided by resident population) so that cities of differing populations can be compared easily with one another. We believe the information can be valuable for city officials to use in benchmarking with their peers and for citizens to see how their municipality ranks financially among comparable cities within the state. Data and interactive visualizations for this report are available at PARCA seeks to obtain information from the largest cities in the state, generally those over 20,000 in population, in sufficient detail to allow an "apples-to-apples" comparison. Providing this information requires considerable effort on the part of city financial administrators, and we are grateful for their continuing cooperation. This edition of the report includes data on 22 cities. The comparisons include data on revenues, expenditures, long-term debt outstanding at year-end, and year-end fund balances for the fiscal year ending September 30, 2014.* A summary table is included as Appendix A, and notes regarding the data are included in Appendix B. THE CITIES Anniston Dothan Hoover Phenix City Athens Enterprise Madison Prattville Auburn Florence Mobile Tuscaloosa Bessemer Gadsden Montgomery Vestavia Hills Birmingham Huntsville Mountain Brook Decatur Homewood Opelika *September 30, 2014, was the most recent year all financial reports were available for all 22 cities. 7

8 Revenue Comparisons 8

9 R E V E N U E C O M P A R I S O N S Chart 1 provides a description of the revenue sources of the 22 cities in the study. The revenues measured are governmental and include only transfers from proprietary sources, as explained in Appendix B. The general pattern has been very stable over time, though the Great Recession took a bite out of municipal finances, which was noted in our 2012 report. For this reason, we benchmark some indicators with their 2008 levels, prior to the impact of the Great Recession, as shown in our 2010 report. Chart 1. Percent of Revenue by Source Sales taxes were the largest source of revenue, at $676 per capita, for these cities. Sales taxes were 40% of 2008 revenues for these cities, a slight rebound after a sharp drop from 45% in 2000 to 40% in Generally, such a pattern reflects the cyclical nature of sales tax revenues that rise and fall with business activity. 9

10 R E V E N U E C O M P A R I S O N S Property taxes ranked second, at $280 per capita and 18% of 2014 revenues, up from 16% in 2008, followed closely by revenues from fees, fines, and other sources and by intergovernmental revenues. Occupational taxes on salaries and wages were a major revenue source in six cities, but are not levied by the other cities. Chart 2. Revenue Mix Chart 2 shows the revenue sources for each of the 22 cities, ranked from highest to lowest by total revenues. Sales taxes predominate in most of the cities. However, there are a few exceptions to the pattern of sales tax dominance. Four Birmingham-area cities collect substantial property tax revenues: Homewood, Mountain Brook, Vestavia Hills, and Hoover. Four cities levy occupational taxes that allow a more balanced revenue structure: Birmingham, Opelika, Gadsden, and Auburn. While Tuscaloosa continues to have an exceptionally large percentage of intergovernmental revenues due to a shared sales tax, Huntsville, at $298 per capita, now surpasses Athens, at $287 per capita. Bessemer and Florence follow close behind at $282 and $265, respectively. 10

11 R E V E N U E C O M P A R I S O N S Table 1 shows the relative ranking of every city by revenue source, providing a more complete explanation of the differences shown in Chart 2. A rank of "1" denotes the highest revenues per capita in each category, and a rank of "22" denotes the lowest. The cities are arranged according to their per capita ranking on total revenues. The cities at the top of the table are high in property tax ranking. Except for the over-themountain suburbs of Birmingham, they also are high in the sales tax ranking. Cities with occupational taxes also tend to be at the top of the table. The cities in the middle of the table tend to rank high in one or two categories but low in other revenue sources. For example, Athens ranks high in intergovernmental and fee-fine-other revenues but low in other areas. Tuscaloosa is high in intergovernmental revenues and business license revenues but low in other areas. The cities at the bottom of the table, with a few exceptions, tend to rank low across the board. Tables 2-6 break down each of the major revenue sources to show the amount of money raised, the percentage of revenue obtained from that source (the "reliance" on that source), the tax rate, and the size of the tax base, defined here as revenue divided by tax rate. These tables 11

12 R E V E N U E C O M P A R I S O N S indicate the various ways in which the 22 cities achieve their revenue rankings, which stem in part from the tax rate and in part from the tax base. They also provide information on the overall diversification of the cities revenue sources. SALES TAX Table 2 compares city sales taxes. The figures exclude revenues from taxes on particular kinds of transactions, such as rental/lease taxes. The cities are arranged according to the per capita amount of revenue raised by the general sales tax, shown in the first column of data. General Sales Tax Points of Interest: The most common sales tax rate was 4%, up from 3% in Ten cities had a sales tax rate of 4%, up from 5 cities in Two cities had a tax rate below 2%, down from 5% in TABLE 2 GENERAL SALES TAX REVENUE 2014 Tax Percent of Tax 2014 Revenue Revenue 2014 Rate Per Percent City Per Capita Revenue 2014 Per Capita Bessemer $ % 4.00% $ 249 Homewood % 2.00% 310 Mobile % 4.00% 232 Anniston % 4.00% 228 Dothan % 4.00% 219 Opelika % 4.00% 219 Huntsville % 3.50% 243 Hoover % 3.00% 270 Florence % 3.50% 219 Gadsden % 4.00% 187 Birmingham % 4.00% 172 Decatur % 4.00% 166 Prattville % 4.00% 171 Enterprise % 4.00% 163 Auburn % 4.00% 142 Athens % 3.00% 266 Phenix City % 3.75% 129 Montgomery % 3.50% 136 Mt. Brook % 3.00% 158 Madison % 3.50% 121 Tuscaloosa % 2.00% 197 Vestavia Hls % 3.50% 104 The top three cities raised more than twice as much revenue per capita as the bottom three. Somewhat surprisingly, Bessemer surpassed Homewood in sales tax revenue per capita. The median per capita yield was $677, up from $600 in 2010 and $535 in Dothan, Mobile, Alabaster, and Enterprise raised over half of all revenues from sales tax. Dothan, at 62%, continued to rely on general sales tax revenue more than any other city. Six cities raised 33% or less of total revenue from sales tax, with Vestavia Hills lowest at 18%. The median for sales tax reliance was 45% of revenues in 2014, up from 43% in

13 R E V E N U E C O M P A R I S O N S The median yield per capita of each percent of tax was $192, up from $172 in Homewood retained the largest sales tax base but raised less per capita for each percent of tax rate at $310, down from $332 in Vestavia Hills had the lowest sales tax yield per capita at $104. PROPERTY TAX Table 3 compares property tax revenue per capita for the 22 cities. The data include all city millages used to support municipal operations; they also include city mills that were earmarked for school purposes in the 15 cities that have such levies, indicated in the table by asterisks. 1 These figures do not include state, county, or separate school system millages. Cities are arranged by the amount of property tax revenue raised, shown in the first column. Property Tax Points of Interest: Table 3 PROPERTY TAX REVENUE 2014 Tax Percent of Tax 2014 Revenue Revenue 2014 Mills Per Mill City Per Capita Revenue 2014 Per Capita Mt. Brook* $ 1,026 50% $ Vestavia Hls.* % Homewood* % Auburn* % Opelika* % Madison* % Huntsville* % Bessemer* % Birmingham* % Decatur* % Anniston* % Tuscaloosa 147 9% Montgomery % Phenix City* % Florence* % Gadsden* 125 7% Hoover* 123 9% Enterprise 99 10% Athens 99 7% Mobile 88 6% Prattville 76 7% Dothan 65 5% The median tax rate was 19.5 mills, up from 18.8 in 2010 and Only 10 cities had tax rates over 20 mills. The median for property tax reliance is 14%. 1 Alabama s local school systems have no independent taxing authority; taxes are levied for them by a city or county government. State law allows property taxes for schools to be levied in one of two ways: (1) as city or county taxes that are earmarked for schools and passed through to the school system; or (2) as school taxes, which are distributed directly to the school system. In some cases, city taxes earmarked for school purposes (type 1 above) are embedded in a city s financial report, and in other cases, not. To be consistent, we have included all city tax millages earmarked for schools in Table 3, adding them into the data when required. No direct school taxes (type 2 above) are included in the table, because the purpose of this table is to compare city finances, not school system finances in these cities. 13

14 R E V E N U E C O M P A R I S O N S Only five cities rely on the property tax for more than 20% of revenues. Most of the cities raised less than $300 per capita from property taxes. Mountain Brook and Vestavia Hills raise far more revenue per capita from property taxes. The median per capita revenue per mill was $ Mountain Brook generated $27.95 per capita for each mill, up $0.50 from OCCUPATIONAL TAX Table 4 shows the four cities that utilize occupational taxes as a revenue source. These are license taxes levied on employers and passed through to their employees working in that city. Cities are arranged in the table by the amount of revenue per capita from the occupational tax. TABLE 4 OCCUPATIONAL TAX REVENUE 2014 Tax Percent Tax 2014 Revenue Revenue of 2014 Rate Per Percent City Per Capita Revenue 2014 Per Capita Gadsden $ % 2.0% $ 189 Birmingham % 1.0% 371 Opelika % 1.5% 204 Bessemer % 1.0% 223 Auburn % 1.0% 168 Occupational Tax Points of Interest: Gadsden levied the highest tax rate, 2%, and collected the most revenue per capita, at $378. Gadsden, Birmingham, and Opelika each raise about 22% of their revenues from this source. Birmingham has the largest tax base on a per capita basis, at $371 for each 1% of tax. Table 5 compares the intergovernmental revenue flowing into the 22 cities. These funds come mainly from federal and state grants, shared state and local taxes, and transfers from cityoperated utility enterprises. The cities are listed in the table according to the amount of revenue per capita from derived intergovernmental sources. Tuscaloosa, Huntsville, Athens, Bessemer, and Florence were the top five cities for intergovernmental revenues, with utility transfers the major source for all but Tuscaloosa. 14

15 R E V E N U E C O M P A R I S O N S INTERGOVERNMENTAL REVENUE Tuscaloosa showed the largest amount of intergovernmental revenue, at $546 per capita, down from $563 per capita in The sources include a countywide sales tax shared by formula among governmental units in Tuscaloosa County, payments from the city school system for debt service on school improvements, and federal grants. These sources supplied 35% of the city s revenue, which was down from 38% in BUSINESS LICENSES Table 6 provides information on the utilization of business licenses as a city revenue source. The amounts shown exclude specific occupational licenses and permits charged for various purposes such as inspections. Those rates vary from one type of business to another. The median for business licenses was $143 per capita. Birmingham raised by far the largest amount per capita from this source, at $380. Homewood, Mountain Brook, Mobile, and Tuscaloosa also raised substantial revenues from business licenses, all exceeding $200 per capita. Birmingham and Montgomery showed the heaviest reliance on business licenses, at 18% and 16%, respectively. The median for business license reliance in 2014 was 9% of revenues, and more than half of the cities in the table derived less than 10% of their revenues from this source. TABLE 6 GENERAL BUSINESS LICENSES 2014 Percent Revenue of 2014 City Per Capita Revenue Birmingham $ % Homewood % Mt. Brook % Mobile % Tuscaloosa % Montgomery % Gadsden % Bessemer 153 7% Anniston 153 8% Hoover % Prattville % Vestavia Hls % Auburn 143 9% Phenix City % Decatur 129 9% Opelika 122 6% Huntsville 108 6% Enterprise 92 9% Dothan 89 6% Athens 82 6% Florence 79 6% Madison 67 7% 15

16 Expenditure Comparisons 16

17 E X P E N D I T U R E C O M P A R I S O N S Chart 3 displays the operating expenditures of the 22 cities included in the study. This comparison looks strictly at city spending on municipal operations and excludes transfers for schools and capital expenditures from the revenue base. As with revenues, the pattern of expenditures is relatively stable over time. The largest outlay, at $503 per capita, was for police, fire protection, and other public safety purposes. This was 39% of the $1,299 in municipal operating expenditures per capita, slightly higher than in 2008 at 37%. Chart 3: Spending by Category Another 17% went toward public works activities, such as street maintenance and solid waste disposal in That is down from 20% in 2008, with a loss in purchasing power, as well as nominal dollars. Together, public safety and public works accounted for well over half of all municipal operating expenditures. Smaller amounts went for general government (18%); parks, recreation, and other cultural programs (13%); and debt service (14%). City allocations for school support and capital outlays accounted for the remainder of total spending. Chart 4 shows the per capita amounts expended by the 22 cities for municipal operations in 2014, excluding municipal support for schools and capital expenditures. These cities are ranked from highest to lowest, with bar segments representing the five operating expenditure categories. 17

18 E X P E N D I T U R E C O M P A R I S O N S Chart 4. Spending Mix in Municipal Operations Birmingham led all the cities in municipal operating expenditures, at $2,031 per capita. This was double the amount spent by Enterprise, the lowest-ranking city. The median city (Mobile and Auburn averaged) spent $1,234 per capita on municipal operations. The chart also makes clear the predominance of public safety spending in city budgets. Every city in the study except Prattville spent more on public safety than any other municipal function. Table 7 shows the ranking of every city by type of municipal operating expenditure, providing a more systematic explanation of the differences shown in Chart 4. A rank of "1" denotes the highest expenditure per capita in each category while a rank of "22" denotes the lowest. The cities are ranked from high to low in terms of overall spending for municipal operations (total expenditures less capital outlay and school support) as shown in the last column. Cities at the top of the table tend also tend to rank 18

19 E X P E N D I T U R E C O M P A R I S O N S high in public safety, public works, social/cultural, and general government spending, as well. All rankings earned by the first five cities in these spending categories were at or above the median rank of 12. Debt service rankings among the top cities, however, vary widely. Tables 8-12 break down each of the major spending categories to show the amount of dollars expended and the percentage of municipal operating expenditures devoted to that function. PUBLIC SAFETY SPENDING PER CAPITA The public safety category includes police and fire protection, E911, emergency management, building inspections, and related functions. All 22 cities in the study spent more money per capita on public safety than on any other category of expenditure. Table 8 compares the cities on the amounts and percentages of operating expenditures for public safety. The median public safety expenditure per capita in 2014 was $481. Anniston spent more on public safety per resident than any of the other cities in the study, at $791. Bessemer, Birmingham, Mountain Brook, and Homewood also exceeded $700 per capita. Five cities allocated 40% or more of municipal operating expenditures to public safety, compared to a median of 32%. Table 8 PUBLIC SAFETY 2014 Exp. Percent of Per Operating City Capita Expenditures Anniston $ % Bessemer % Birmingham % Mt. Brook % Homewood % Gadsden % Tuscaloosa % Mobile % Hoover % Dothan % Opelika % Vestavia Hls % Florence % Montgomery % Huntsville % Decatur % Prattville % Auburn % Phenix City % Athens % Madison % Enterprise % Spending per capita is not always a measure of program quality in public safety or other municipal functions. Through innovation, cities may create cost-effective services that economize taxpayer resources. For example, an award-winning Student Public Safety Program in Auburn utilizes trained college students as firefighters, E911 dispatchers, and public safety specialists, enabling that city to provide high-quality public safety services while controlling costs. The program is described on the city s website ( Another example of public safety innovation is the city-county jail in Mobile County. 19

20 E X P E N D I T U R E C O M P A R I S O N S PUBLIC WORKS SPENDING PER CAPITA Public works ranks as the second- or third-highest spending allocation for most of the cities in the study. Table 9 shows the amounts and percentages of spending for this category, which includes streets, sanitation, engineering, parking, transit, community development, and related functions. Median spending among these cities for public works was $200 per capita, 15% of municipal operating expenditures. Birmingham topped the cities on both measures, at $473 per capita and 23% of spending. Fewer cities spent over $400 per capita on public works than in In 2008, seven cities spent more than 23% on public works, with three exceeding 30%. TABLE 9 PUBLIC WORKS 2014 Exp. Percent of Per Operating City Capita Expenditures Birmingham $ % Mt. Brook % Bessemer % Anniston % Dothan % Tuscaloosa % Athens % Decatur % Huntsville % Gadsden % Homewood 193 9% Auburn % Florence % Montgomery % Mobile % Enterprise % Hoover % Madison % Vestavia Hls % Phenix City % Prattville % Opelika 100 5% SOCIAL AND CULTURAL SPENDING PER CAPITA Social and cultural spending often ranks fourth or fifth among the five broad functions compared in this study. The category includes parks and recreation, museums, cemeteries, civic centers, libraries, health and mental health services, animal shelters, and senior citizen and youth services. Table 10 compares the 22 cities on the amount of social/cultural spending. The social/cultural medians are $178 per capita and 12% of municipal spending. As in years past, Anniston continues to spend the most on social and cultural activities, at $332 per capita and 17% of total operating expenditures, followed by Birmingham at $234 and 12% of expenditures. In 2008, Montgomery was a relatively close second to Anniston but has since fallen to near the median. TABLE 10 SOCIAL/CULTURAL 2014 Exp. Percent of Per Operating City Capita Expenditures Anniston $ % Birmingham % Homewood % Opelika % Mt. Brook % Florence % Huntsville % Dothan % Gadsden % Hoover % Decatur % Mobile % Montgomery % Auburn 132 9% Vestavia Hls % Phenix City % Tuscaloosa 114 7% Enterprise 95 10% Athens 92 8% Madison 80 8% Bessemer 77 4% Prattville 68 8% 20

21 E X P E N D I T U R E C O M P A R I S O N S Six cities fall below $100 per capita, but the percentage of expenditures for social and cultural activities are more than double in Enterprise than in Bessemer. Tuscaloosa benefits from a Parks and Recreation Authority that receives support from the county. GENERAL GOVERNMENT SPENDING PER CAPITA General government activities include the mayoral and council offices, courts, finance, economic development, administrative support, city garage, and related functions. Table 11 shows the spending data for each city. The median expenditure level was $230 per capita, and the top cities spent over $300 on this function. The median city spending percentage was about 15%, with seven cities exceeding 20%, compared to only two exceeding 20% in 2008, and none below 10% on general government activities. DEBT SERVICE SPENDING PER CAPITA Table 12 shows the amounts allocated by the 22 cities for the payment of principal and interest on long-term debt. The medians for debt service were $129 per capita and 13% of spending. Two cities spent less than $100 per capita on debt service, while seven allocated less than 10% of expenditures to this function. Opelika ranked first in the per-capita amount of debt service, at $344, but Madison ranked first in the share of operating expenditures devoted to debt service payments, at 24%. Huntsville, Auburn, and Madison were the only other cities with over 20% of spending allocated to debt service. 21 TABLE 11 GENERAL GOV'T Exp. Percent of Per Operating City Capita Expenditures Bessemer $ % Birmingham % Gadsden % Phenix City % Dothan % Anniston % Mobile % Homewood % Opelika % Auburn % Huntsville % Montgomery % Tuscaloosa % Mt. Brook % Decatur % Prattville % Vestavia Hls % Enterprise % Hoover % Madison % Florence % Athens % TABLE 12 DEBT SERVICE 2014 Exp. Percent of Per Operating City Capita Expenditures Opelika $ % Huntsville % Auburn % Dothan % Madison % Tuscaloosa % Florence % Gadsden % Birmingham 181 9% Homewood 167 8% Montgomery % Enterprise % Bessemer 160 9% Athens % Phenix City % Vestavia Hls % Anniston 141 7% Prattville % Mobile % Hoover % Decatur 95 6% Mt. Brook 17 1%

22 Long-Term Debt Comparisons 22

23 L O N G - T E R M D E B T C O M P A R I S O N S Chart 5 compares the 22 cities in terms of the per capita amount of general long-term debt outstanding at fiscal year-end The figures exclude any "advance refunding" that effectively reduced the debt to be paid from tax sources, and any debt of enterprises or authorities that have a separate accounting basis. The revenue from issuance of this debt is used to finance all or part of major capital projects, such as streets, libraries, and parks, as well as construction of schools in some cities. Madison, Huntsville, and Bessemer ranked highest in terms of general long-term debt, at more than $3,000 per capita. Dothan and Mountain Brook were lowest, at less than $400 per capita. Chart 5. Per Capita School Support, Capital Spending, Debt 23

24 Year-End Balance Comparisons 24

25 Y E A R - E N D B A L A N C E C O M P A R I S O N Chart 6 displays the unreserved, unobligated balance in the general fund of the 22 cities at year-end in 2014, expressed as a percentage of general fund expenditures for the year. Chart 6. Unreserved Fund Balances as Percent of Expenditures A general goal for cities is to maintain a sufficient balance on hand for cash flow and unforeseen requirements. This is often expressed in terms of a percentage of the spending level. A one-month balance is equivalent to 8.3% of annual expenditures. In 2008, all cities exceeded the 8.3% benchmark except for Huntsville, Mobile, and Prattville. By 2014, four cities were below 8.3%: Vestavia Hills, Mobile, Montgomery, and Dothan. Prattville is now at 16%. At 9%, Tuscaloosa is the lowest of the cities above the one-month threshold. Meanwhile, Opelika holds a fund balance of 45% of expenditures, followed by Florence at 40%. 25

26 Appendix A: The Data 26

27 A P P E N D I X A : T H E D A T A Table 13 PER CAPITA FINANCES OF ALABAMA'S LARGEST CITIES, FY

28 A P P E N D I X A : T H E D A T A Table 13 PER CAPITA FINANCES OF ALABAMA'S LARGEST CITIES, FY 2014 (CONT.) 28

29 Appendix B: About The Data 29

30 A P P E N D I X B : A B O U T T H E D A T A Comparisons of data in this report to previous PARCA publications may be inaccurate due to changes in accounting procedures by the cities or by the Governmental Accounting Standards Board, or from errors in annual Census Bureau population estimates. In particular, Statement No. 34 of the Governmental Accounting Standards Board, effective June 1999, revised the formatting of local government financial statements. In general, data in the report are limited to "governmental funds," which include general, special revenue, debt service, and capital projects funds. Proprietary funds are generally excluded, except for any transfers between the city's governmental funds and these funds. To improve data comparability, the report includes solid waste collection but excludes landfills and sewage treatment plants for all cities, regardless of the fund structure. Revenue and expenditure data in the report are unduplicated sums of revenues received and expenditures made from the governmental funds, plus any transfers to and from proprietary funds. Revenues are grouped for descriptive purposes. Municipal taxes are divided into four general categories: sales taxes (general sales and use, lease and rental, lodging, cigarette, and gasoline levies); property taxes (general ad valorem and personal property); occupational taxes on payroll income; and business privilege licenses. Business licenses are grouped with tax sources because they generally make up a substantial portion of a city's total revenues. Intergovernmental revenues include federal, state, and interlocal governmental transfers, such as federal Community Development Block Grants, state gasoline and beer tax transfers, shared county sales taxes, and transfers from city-owned utilities and enterprise operations. Other revenues include interest, fees, fines, permits and licenses other than for business privilege, and miscellaneous sources. Bond proceeds are excluded from revenues. expenditures. Operating expenditures are divided into five functional categories: public safety (police, fire, E911, civil defense, inspections, and related functions); public works (streets, sanitation, engineering, parking, transit, Community Development Block Grants unless allocated to another function in the financial report and related activities); general government (mayoral and council offices, courts, finance, support functions, economic development, city garage, and related functions); social and cultural activities (parks, museums, cemeteries, civic auditoriums, libraries, health services, mental health services, animal shelters, welfare, juvenile courts, senior citizen and youth activities, and related expenditures); and debt service (principal, interest, and related charges for long-term debt repayment). Any separately reported fringe benefits, and contributions to external entities, such as nonprofit organizations, are allocated to operating expenditure categories. Resources appropriated directly to local public school systems are categorized as support for local schools. Capital project expenditures include capital additions financed through the capital project fund(s), as well as any departmental construction expenditures found in general and special revenue funds. Fund balances shown in the report are unreserved, undesignated general fund balances for the end of the fiscal year, expressed as a percent of general fund expenditures. Some cities may have sizeable balances in other funds, but the transfer of these funds is usually restricted by law, grant terms, and/or city ordinance. Data on outstanding city debt include only long-term bonded debt outstanding as of September 30, The figures are net of any advance refunding that reduces debt repayment from tax sources. Debt attributable to enterprises, short-term borrowing, obligations for capital leases, or employee fringe benefits is excluded. Expenditures are grouped for descriptive purposes into three broad categories: municipal operations, support for local schools, and capital projects. Municipal operating expenditures include departmental capital outlay from general or special revenue funds for equipment purchases, but exclude construction 30

31 I N D E X O F C I T I E S Anniston 19, 20 Athens 10, 11, 14 Auburn 10, 18, 19, 21 Bessemer 10, 12, 14, 19, 21, 23 Birmingham 10, 11, 14, 15, 18, 19, 20 Dothan 12, 23, 25 Enterprise 12, 18, 21 Florence 10, 14, 25 Gadsden 10, 14 Homewood 10, 12, 13, 15, 19 Hoover 10 Huntsville 10, 14, 21, 23, 25 Madison 21, 23 Mobile 12, 15, 18, 19, 25 Montgomery 15, 20, 25 Mountain Brook 10, 14, 15, 19, 23 Opelika 10, 14, 21, 25 Prattville 18, 25 Tuscaloosa 10, 11, 14, 15, 21, 25 Vestavia Hills 10, 12, 13, 14, 25 31

32 P.O. BOX LAKESHORE DRIVE BIRMINGHAM, ALABAMA PARCALABAMA.ORG